Take five: China, FAANG, Turkey and Christmas fears weigh heavily


An excavator is seen at a construction site for new residential buildings in Shanghai, China in this file photo from March 21, 2016. REUTERS / Aly Chanson / File Photo

Chinese growth and corporate earnings in the US and Europe, including the results of the blockbuster FAANGs, will give the markets something to digest the week ahead, as Turkey’s central bank is expected to meet after another midnight reshuffle.

And for many, the big question: is Christmas canceled?

1 / CARTER CHINA

From a crisis in the real estate market induced by Evergrande to power cuts crippling the production lines supplying Apple and Tesla, the world number one. 2 the economy has cause for concern.

A good indicator of the fallout is provided by Monday’s third quarter GDP numbers and other closely watched data points, from factory production to retail sales.

Economists predict that the Chinese economy grew 5.2% year-on-year, the lowest figure in a year, amid power rationing, persistent bottlenecks and soaring fuel prices. raw materials, all as consumption languished amid sporadic outbreaks of COVID-19.

The real estate sector, a key growth engine, is reeling from rising defaults, with sales falling and construction slowing. Yet few expect the central bank to come to the rescue, for fear of fomenting bubbles in debt and house prices.

-POLL-China’s growth expected to slow to 5.5% in 2022, modest policy easing expected –

ANALYSIS-$ 1.3 billion land sales drop in China to test local finances and economy – read more

Chinese growth slows

2 / FLOW OF PROFITS

Netflix launches its third quarter report on Thursday for the “FAANG” group of large US technology and growth companies Facebook, Apple, Amazon, Netflix and Alphabet, parent company of Google.

The video streaming company said “Squid Game” became its biggest series launch to date, while last month “The Crown” won the Emmy for Best Drama Series. Netflix also bought video game maker Night School Studio in an effort to branch out.

Netflix’s stock price has climbed around 16% in 2021, broadly in line with the S&P 500 and average relative to other FAANG stocks. Other companies due to release their results next week include Tesla, Johnson & Johnson and Intel.

-Netflix buys the first video game studio, launches mobile games find out more

US Profits Strong, But Supply Chains And Costs Are Investors Worried Read More

Reuters Charts

3 / SPOTTING INFLATION

Markets will be looking for signs that production bottlenecks, tensions in the supply chain, labor shortages and soaring energy prices begin to undermine future profits when Europe’s benefits will kick in.

With rate hikes in the works to tackle inflation rigidity, the financial and energy sectors are expected to thrive as rising yields reduce the appeal of so-called growth stocks.

The third quarter earnings season tasters of luxury giant LVMH (LVMH.PA), tech star SAP (SAPG.DE) and steelmaker Outokumpu (OUT1V.HE) have so far left no bitter aftertaste. Now it’s the turn of blue chips like ASML Holding (ASML.AS), Unilever (ULVR.L), Barclays (BARC.L) and ABB (ABBN.S).

Profits are expected to jump 46.7% year-on-year for components of the pan-European STOXX 600 index, although the gap between positive and negative revisions has narrowed, confirming the story that Europe has passed the peak of growth.

-Price clamp: global economy caught in a perfect storm read more

Profit reviews

4 / NOL, CANCELED?

A year after coronavirus shutdowns dampened festive spirits, world leaders are hoping the supply disruption won’t be the Grinch who stole Christmas.

It may take more than two months, but the panic buying of turkeys and festive treats started amid the chaos of the supply chain.

White House officials warn Americans could face higher prices and empty shelves this Christmas. The busy ports of Los Angeles and Long Beach are expanding their operations to unload around 500,000 containers waiting on cargo ships offshore.

Britain has urged consumers to shop normally after containers carrying toys and electrical goods were diverted from its largest port because it was full.

The purchasing managers’ flash indices (PMI) for October to Friday from Australia, Europe and elsewhere could illustrate the difficulties in the supply chain. Corporate sentiment in Germany is already suffering.

– Biden appeals to Target and Walmart to correct bottlenecks threatening vacation sales read more

Long Beach Anchorage congestion (number of vessels)

5 / EMERGING DISASTERS

The central bank is rarely boring in emerging markets, but Turkey tops most others in excitement.

A new group of policymakers will meet on Thursday after President Tayyip Erdogan initiated yet another reshuffle, paving the way for further rate cuts amid stubbornly high inflation and sending the Lira to new all-time lows.

But elsewhere, central banks are busy raising rates. Hungary is expected to raise its benchmark on Tuesday to cope with rising inflation that has led to sharp rate hikes elsewhere in central Europe.

Russia’s central bank is likely to follow on Friday as policymakers have warned en masse of rising price pressures and unanchored inflation expectations.

-Edogan’s central bank overhaul paves the way for more rate cuts read more

Timeline of the lira on October 15

Reporting by Kevin Buckland in Tokyo, Danilo Masoni, Dhara Ranasinghe, Julien Ponthus and Karin Strohecker in London, Lewis Krauskopf in New York; compiled by Karin Strohecker; edited by Alexander Smith

Our standards: Thomson Reuters Trust Principles.

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